Life Science firms outgrowing incubator space typically face a huge time crunch—they have raised Series A funding and the clock is ticking. These firms now need to find new space that can accommodate their impending expansion—graduation space.
As the New York City life science ecosystem continues to evolve, more graduation space options will emerge. For many groups, receiving a funding round is often a driver for growth and leads to the desire to be in step-out lab space immediately. In a market such as Cambridge or San Francisco, there are options that exist. In NYC, however, it is important to get ahead of the graduation space search and begin the process as early as possible.
Long-term planning is critical. The reality is that it can take from nine to 12 months to build out a laboratory space from scratch. It can be accelerated, in those cases where another Life Science organization is vacating, but rarely to the point of expectation.
Here, property owners are still getting up to speed on building and operating lab spaces. Many owners mistakenly believe that Life Science is all about toxic chemicals and radiation, or run into a chicken-or the-egg scenario in terms of making the up-front infrastructure investments before a tenant is negotiating on a space. As such, they often prefer to focus on more traditional office tenants. However, with adequate planning, graduation space can be secured and the number of available options in NYC is growing exponentially, as more landlords begin educating themselves on the industry and the opportunity that comes along with it.
In the NYC market, leasing graduation space is easily the biggest challenge for fast-growing life science companies. Finding lab-ready space is hard enough and built lab space in Manhattan has historically been very difficult to come by. Whether you need 3,000 or 30,000 square feet of lab space, labs are expensive to build and require a landlord with the necessary expertise and commitment to the industry in order to successfully step out of an incubator and continue on an upward trajectory. Drivers here include location, price, amenities and co-tenants. Most high-end R&D groups are looking to be surrounded by other like-minded scientists and entrepreneurs. Additionally, NYC’s tech industry is accustomed to amenities such as private outdoor spaces, top-end food and beverage options, gyms and pleasant communal spaces, and Life Science tenants are demanding the same dynamic environment.
Another consideration to keep in mind when a Life Science tenant needs new space is whether amenities are available beyond the context of a typical office layout. While fitness centers and coffee bars are a nice add-on, Life Science organizations seek more specified amenities, such as conference and breakout rooms, more lab space and additional equipment access and storage.
This is the main difference between a lab-ready building versus a building where the landlord is focused on converting to Life Science and doing the appropriate amenitization. More landlords are trying to tap into this market and are fitting out their spaces accordingly.
In terms of locations, there are options for Life Science tenants in Manhattan or even in Long Island City or Brooklyn, where the rents are more reasonable. These properties are typically up-and-coming options in areas that are shedding their light-manufacturing past and looking to redefine themselves for a new era of occupancy.
Such emerging locations present a true win/win. The landlord gets the premium he or she sought, and the Life Science firm gets the space, amenities and expandability it needs. There is also the benefit of being surrounded by other like-minded organizations in a Life Science cluster, an ecosystem where chance encounters can make innovation blossom.
A well-planned strategy for growth is key to any Life Science organization looking to emerge from the shell of its incubator space. Done right, it is a move that will pay dividends well into the company’s future.